Time to Prune your Business for Better Profits

If you are a gardener, it’s all about the Chelsea Chop this week. The premise is that if you prune or cut back plants now you’ll get a better crop of flowers, just a little bit later. I do it every year, and it works!

What also works very well is a small cut at your business too. Prune out the dead wood; the under performers (staff and customers) and make room for your star flowers to really blossom.

But what do you cut and by how much? Let’s deal with ‘the what’ first.

1. Products – the under performers the ones that sit on the shelf too long. The fashionable colours you added a couple of years ago and now are un-fashionable. The slow sellers the duplicated versions, the out dated stock items. Clear them out once and for all and save time and resources managing them. Remove the complexity from the range.
2. Customers – remove those that lose you money as well as those who are just plain unreasonable to deal with. Don’t fret about losing income you’ll be saving money because you never made money from them anyway. Learn how to spot the ‘bad’ clients in my blog Are the Right Clients Getting the Right Attention
3. Suppliers – Time to negotiate a better deal with your suppliers; quicker delivery, better credit terms, reduced prices or bulk discounts. Remember if you don’t ask you won’t get anything.
4. Services – just like products, remove the ones that are too expensive to deliver, the most up-profitable ones and those that you sell once in a blue moon or aren’t part of your core offering. Simplify to make more money.
5. Staff – much has been written about staff productivity and many gurus suggest that you should sack 10% of your staff every year. One way to remove the dead wood but you’ll only have to recruit better and that takes lots of time. Better surely to engage staff with your vision and give them the systems, processes, tools and training to do the job better. Remove the obstacles that your staff have to tackle everyday – make it easy for them to engage with your customers and do a really good job – such a great marketing tool.

How much should you cut? Enough to make a difference. My suggestion is to cut little and often just as if you were losing weight. Forget trying to lose a stone in 2 months; better to focus on losing a pound or 2 every week. The same is true of cutting in your business.

Related Article: The Ultimate Guide to Marginal Gains and the 1% Principle

Marginal improvements soon become big gains if you keep focusing on them. Not convinced? Then target yourself to achieve a 1% reduction on all expenses for the next month – I know that’s easy to achieve and I also know that you’ll do even better than that! Don’t ignore the radical cut either; sometimes a hard prune back to the ground is what your business really needs.

Now the economy is better, it’s easier to let your foot slip off the pedal. Don’t. Your job as the business leader is to continually refine and improve everything so the business runs like clockwork, delivering maximum profit for least effort.

Get the shears out now, just be careful where you cut!